Hyderabad to add 4.6 mn sq ft of new office space this quarter

Hyderabad: Hyderabad, which topped in office space absorption and new supply in the third quarter of 2021 (July-September), is likely to see a fresh supply during Q4 2021 (October-December) up to 4.6 million sq ft taking the total supply for the year 2021 to approximately 9.7 million sq ft. Of the fresh supply, 51 per […]

Hyderabad: Hyderabad, which topped in office space absorption and new supply in the third quarter of 2021 (July-September), is likely to see a fresh supply during Q4 2021 (October-December) up to 4.6 million sq ft taking the total supply for the year 2021 to approximately 9.7 million sq ft.

Of the fresh supply, 51 per cent will come in the IT SEZ segment, 35 per cent in the IT BPM and 14 per cent in the commercial segment, according to Colliers.

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Between January and September 2021, the key demand drivers in the city have been BFSI accounting for 31 per cent, IT-BPM about 30 per cent, flexible space 28 per cent, and engineering, manufacturing, healthcare, and pharmaceutical accounting for the remaining 11 per cent.

Colliers observes that the developers are going slower with new supply as demand gains momentum. And office rentals are likely to remain stable in Q4 2021 and may rise gradually from 2022.

Ramesh Nair, CEO, India & MD, Market Development, Asia at Colliers, told Telangana Today, “Hyderabad office market’s long-term market fundamentals remain intact. The market saw some large transactions during Q3 2021, lending confidence to developers and occupiers. During Q3 2021, gross absorption rose more than three-fold quarter-on-quarter.”

“For the first time during a quarter, Hyderabad had the maximum leasing volume at 2.5 million sq ft surpassing Bengaluru, as occupiers focused on large block deals and even leasing entire buildings,” he added.

Q3 performance

In Q3 2021, the city accounted for 24.2 per cent of the total absorption of 10.3 million sq ft space across top six cities of India while it contributed to 29.6 per cent of new supply of 10.8 million sq ft.

Hyderabad surpassed Bengaluru, Delhi-NCR, Mumbai, Pune, and Chennai in both gross office absorption as well as new supply during the Q3 of 2021. The city’s office space growth momentum continues owing to its strong fundamentals taking the overall stock to 74.5 million sq ft out of 566.6 million sq ft stock across top cities of India (accounting for 13.1 per cent). Leasing growth was driven by select large deals.

Hyderabad witnessed a 33.6 per cent year-on-year jump in gross absorption in Q3 2021 to 2.5 million sq ft, taking the total absorption from January 2021 up to September 2021 to 3.7 million sq ft, accounting for 18 per cent of India’s 20.4 million sq ft absorption (higher than Delhi-NCR, Mumbai, Pune and Chennai).

New supply in Q3 2021 went up over 100 per cent year-on-year to 3.2 million sq ft, taking the total supply between January to September 2021 to 5.1 million sq ft, accounting for 22 per cent of India’s 22.9 million sq ft absorption (higher than Delhi-NCR, Mumbai, Pune and Chennai).

Nair added, “Locations of Raidurg and HITEC City are seeing the maximum leasing traction. Robust infrastructure in the city, coupled with a business-friendly government will continue to enthuse occupiers to expand here.”

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